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In a representation to the Government the chamber has pointed out that while the exporting community was happy with the continuation of the DEPB scheme, the sudden introduction of debiting of Special Additional Duty will have an impact especially when exports are showing a declining trend.

NEW DELHI, June 4

THE recent changes in the provision relating to Duty Entitlement Pass Book (DEPB) scheme will affect the exporting community, the Confederation of Indian Industry (CII) has said.

In a representation to the Government the chamber has pointed out that while the exporting community was happy with the continuation of the DEPB scheme, the sudden introduction of debiting of Special Additional Duty (SAD) will have an impact especially when exports are showing a declining trend.

The chamber has expressed the opinion that the impact of this change will be felt by exporters, as the CIF value of import, which can be covered against a specific value of DEPB, will be reduced considerably when SAD is debited.

Moreover, there would be an increase in effective customs duty on inputs imported by exporters against DEPB. The chamber has pointed out that a steel manufacturer whose main imported inputs are nickel and melting scrap of iron and steel, will have to pay more on effective duty of 9.872 per cent after taking Cenvat credit for additional duty of customs as against earlier payment of 5 per cent.

"This means payment of almost double the duty. The reason for this increase is debiting of 4 per cent SAD to DEPB under the new provision by the customs," the chamber has said.

Debiting of SAD to DEPB is also not logical, as the element of SAD on inputs is not taken into account while calculating DEPB rates, the chamber has said. Moreover, exemption of SAD on DEPB had earlier resulted in a premium on DEPB scrip for exporters and with the debiting of SAD the DEPB scrip is likely to go at a discount.

This would have an impact on exporters using DEPB for their own imports as well as those who transfer it to some other importer.

In view of the adverse effect of this change on all exporters exporting goods under the DEPB scheme, the chamber has urged the Government to carry out necessary amendments in the customs notification 45/2002 so as to restore the earlier provision.

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